Striking out claims for “warehousing” – when is delay an abuse of process?
Market Insight 03 April 2023 03 April 2023
UK & Europe
Sometimes in litigation a defendant will feel that the claimant is not doing all it can to progress its claim, perhaps buying time while it tries to hunt down evidence, seeks funding or tends to other matters. A question considered by the High Court in a number of recent decisions is when such delay is indicative of “warehousing” such that the claim should be struck out as an abuse of process. These cases, discussed further below, vary significantly in both facts and outcome. However, when considered collectively, common themes emerge which are helpful in considering when a defendant’s application to strike out for want of prosecution might be successful.
Recap of procedure: strike out for abuse of process
Strike out for abuse of process is permitted by Civil Procedure Rule 3.4(2)(b), and the inherent jurisdiction of the Court, in order to uphold the public interest in the proper administration of justice. There is no definition of abuse of process in the CPR and in each case it will be highly fact sensitive. Lack of momentum or delay in proceedings alone is not enough, even in cases of extreme delay. There must be some additional element which pushes it over the line into abuse of process.
One type of abuse of process – warehousing
That additional element constituting abuse of process might be where the delay demonstrates a lack of intention on the part of the claimant to pursue the claim, also known as “warehousing.” Warehousing is not a technical term, but is shorthand used to describe a range of conduct, including inordinate delay, which may indicate that an action is deliberately not being pursued.
Not every instance of putting a claim on hold constitutes an abuse of process. In each case, the Court will need to consider all circumstances of the claim. In particular, there are two types of warehousing:
- Type 1: where a claimant has issued or pursued proceedings with no intention of bringing them to a conclusion. This will almost always constitute an abuse of process.
- Type 2: where a claimant decides not to pursue proceedings for a period, even if the claimant intended to pursue them initially and/or intends to pursue them at some point in the future. Whether this amounts to an abuse of process is highly fact sensitive.
Test to strike out for abuse of process
Even if an abuse of process is established, this does not automatically lead to an order for strike out. As set out in Asturion Fondation v Alibrahim, there is a two-stage test that must be satisfied:
- Does the delay / conduct in question amount to an abuse of process?
- If so, should the court exercise its discretion to strike out the claim (taking into account, for example, proportionality, fairness, and all circumstances of the claim)?
Recent decisions on the issue of warehousing are helpful in understanding the approach of the Courts and where applications might be tactically deployed:
- In Alfozan v Quastel Midgem(Commercial Court, January 2022) in which Clyde & Co acted for the defendant, there were significant delays in progressing the claim over three years, and a myriad of procedural failings on the part of the claimant. The Court found that in that time, the claimant did little more than the bare minimum to keep the claim alive. Our client’s application to strike out was successful – the Court held that (i) the cumulative effect of his conduct was to evidence the fact that he issued the claim with no genuine intention to progress it, and (ii) it was appropriate in the circumstances to strike it out.
- In Geo-Minerals GT v Downing and others (QBD, August 2022), the procedural chronology was protracted and, at the time of the application for strike out, it had been more than four years since the claim was issued (on the cusp of limitation and without first complying with the applicable pre-action protocol) and still no CCMC had been scheduled. The Court acknowledged that the pace of the procedural timetable “does not present an attractive picture.” That said, the Court held that the delays, unfortunate as they were, did not evidence an intention on the part of the claimants to “warehouse” the proceedings without something more, and therefore there was no abuse of process. Despite the delays the claimants had shown themselves willing to pursue the matter: for example, they were proactive about funding matters and had explanations for the periods of delay.
- In the most recent of these decisions, Morgan Sindall Construction and Infrastructure Ltd v Capita Property and Infrastructure (Structures) Limited and another (TCC, January 2023), the Court again refused to grant an order to strike out. The defendant applicant argued that the claimant had been dilatory in progressing the claim: proceedings were issued in July 2017 and, by the application hearing in January 2023, no CCMC had yet taken place (although one was scheduled for the following month). A significant amount of time was equally spent engaged in pre-action correspondence.
However, much of the delay was attributable to another claim that the claimant was running against the second defendant’s insurers, which the defendant was aware of and had actively encouraged. At one time a stay had been granted to allow the claimant to pursue the claim against those insurers, and the defendant had participated in a tripartite mediation just prior to making the strike out application. The Court found that although there were periods where the claimant deliberately put the matter on hold, this was not evidence of an intention not to pursue the claim, even temporarily. There was a valid explanation for doing so, in that the claimant’s procedural approach was commercially sensible and the defendant had participated in and endorsed it.
So when will a claim be struck out for warehousing?
As mentioned above, delay alone is not sufficient to establish abuse of process. Rather, there must be a demonstrable intention on the part of the claimant not to pursue the claim, which is generally inferred from the delay and other aspects of the claimant’s conduct. The Court will look at:
- Whether there was an explanation for any period(s) of unusual or inordinate delay: if the claimant is able to explain the delay, it is more likely to signify an intention to pursue the claim than unexplained inactivity.
- Whether the claimant has engaged with key milestones in the procedural process: if the claimant is guilty of a series of minor or technical procedural failings, this is less likely to signify an abuse of process than failure to engage with key requirements such as compliance with pre-action protocols, or seeking a CCMC. Again, if there is a reason the claimant has failed to engage, the Court is less likely to conclude that there has been an abuse of process and / or that strike out is a proportionate remedy.
- The claimant’s response to the strike out application: in Alfozan the claimant failed to respond to the application until 6 days before the hearing, some six months after it was issued. The Court found that this lack of engagement was an indication of lack of intention to pursue the claim, and that it was appropriate to strike out the claim.
- How proactive the claimant has been: if the only actions taken by the claimant are the minimum actions necessary to keep the claim alive, this is more indicative of an intention not to pursue a claim than actions taken by a claimant (even if very slowly) which are proactive or otherwise suggest the claimant is interested in advancing matters. In Morgan Sindall, the Court took into account that a mediation had just taken place and a CCMC had been listed, neither of which suggested the claimant intended to let the claim go stale.
- How the defendant has behaved: whilst it is not incumbent upon the defendant single-handedly to drive the litigation process when faced with an apathetic opponent, equally the Court will look at whether or not the defendant has simply allowed the claim to languish. For example, the Court will look at attempts in correspondence by the defendant to prod the claim along. In Morgan Sindall, the first defendant was aware of the reason for the delay and encouraged it, which the Court took into account. Conversely, in Alfozan the defendant had pressed the claimant to advance matters, without success, before making its application.
Exercise of discretion
In considering whether it is appropriate in the circumstances to strike out a claim, the Court will take into account factors including whether a pattern of abuse has been established (for example, if claims against co-defendants have been successfully struck out, as was the case in Alfozan) and whether or not other, less draconian remedies or the creative use of other case management powers would be appropriate or effective.
Strike out remains a useful tool to shut down claims which take liberties with the court process; however, an application for strike out for abuse of process on the basis of slow progress alone – even desperately slow progress – is not likely to succeed. A combination of factors which cumulatively suggest that the claimant lacks intention to proceed with the claim, and the absence of other appropriate remedies, will make the strongest application for strike out.